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Leber et al., Appellants, v. Smith et al., Appellees.
[Cite as Leber v. Smith (1994), Ohio St. 3d .]
Civil procedure -- Civ.R. 51 -- Contesting improper jury
instructions -- Interpretation of insurance contract
involves a question of law to be decided by a judge --
Jury permitted to determine factual issues.
(No. 93-646 -- Submitted May 16, 1994 -- Decided October
19, 1994.)
Appeal from the Court of Appeals for Erie County, No.
E-87-43.
This case involves two lawsuits. The first ("Leber I")
was a personal injury suit brought against various officials of
Erie County. The second ("Leber II") was a suit brought
against insurance companies alleging, among other things, that
the insurers had acted in bad faith when they defended the
county officials in Leber I.
On April 7, 1979, plaintiff-appellant Eugene A. Leber was
accidentally shot by Erie County Deputy Sheriff Steven A.
Smith, defendant-appellee. The shooting occurred when Smith
stopped a car driven by Leber. As he approached Leber's car
with his firearm drawn, Deputy Smith slipped on a patch of
ice. Smith accidentally discharged his weapon. Leber was
struck by the shot and rendered a paraplegic.
In 1981, Leber and his parents, plaintiffs-appellants
Richard P. and June M. Leber, filed suit in the United States
District Court for the Northern District of Ohio, claiming a
civil rights violation. The federal trial court granted
summary judgment for the defendants, which was affirmed on
appeal. Leber v. Smith (C.A.6, 1985), 773 F.2d 101.
Leber I, the personal injury action, was filed in the Erie
County Court of Common Pleas in June 1983. Leber and his
parents were plaintiffs in this action, while appellees Smith,
the Sheriff of Erie County, the Board of Commissioners of Erie
County ("the board") and its individual members were defendants.
At the time of the accident, the Sheriff's Department was
insured by American Home Assurance Company ("American Home").
American Home assigned the law firm of Eastman & Smith to
defend its insured.
At the time of the accident, the board was insured by
Buckeye Union Insurance Company ("Buckeye Union"). Buckeye
Union assigned attorney Raymond N. Watts, defendant-appellee,
to defend its insured.
In an entry, the trial court in Leber I held that the
board was liable under the doctrine of respondeat superior for
any negligence of the Erie County Sheriff or his deputies that
proximately caused injury to the Lebers.
Settlement negotiations began. The Lebers demanded
$2,300,000 in full and final settlement of their claims against
the county officials. The Lebers calculated this amount by
adding $2 million of coverage allegedly available to the board
under the Buckeye Union policy to the $300,000 of coverage
allegedly available under the American Home policy. The
board's position was that settlement of the case could not be
discussed until Buckeye Union offered to participate and
contribute to that amount. Buckeye Union, however, contended
that there was no coverage in its policy for the Sheriff of
Erie County or deputy sheriff and, therefore, made no
settlement offer. An internal office memorandum, however,
indicated that Buckeye Union analysts believed that Buckeye
Union was liable under the terms of its policy.
Ultimately, Leber I was tried before a jury. The jury
found thirty-five percent of the total negligence to be
attributable to Smith, sixty-five percent of the negligence to
be attributable to the Erie County Sheriff and no negligence to
be attributable to Eugene Leber.
Upon reviewing the jury's verdict in favor of the Lebers,
the trial court ordered that "judgment is rendered in favor of
plaintiffs and against defendants; that defendant Steven A.
Smith shall pay plaintiff Eugene A. Leber the sum of three
million five hundred four thousand dollars ($3,504,000.00);
that defendant Erie County Sheriff (i.e., the Erie County
Sheriff's Department) shall pay to Eugene A. Leber the sum of
six million four hundred ninety-six thousand dollars
($6,496,000.00); that defendant Steven A. Smith shall pay to
Richard Leber and June Leber the sum of fifty-two thousand five
hundred dollars ($52,500.00); and that defendant Erie County
Sheriff … shall pay to Richard Leber and June Leber the sum
of ninety-seven thousand five hundred dollars ($97,500.00).
"It is further the ORDER, JUDGMENT, and DECREE of this
Court, in accordance with the approved judgment entry filed
July 27, 1984, that Erie County, Ohio, by and through defendant
Board of Erie County Commissioners, is liable for the entire
judgment in the sum of ten million one hundred fifty thousand
dollars ($10,150,000.00), plus all interest which may accrue
thereon.
"… [I]nterest shall accrue at the rate of ten (10%)
percent per annum from the date of the filing of this entry and
… defendants shall pay all court costs incurred herein."
(Footnote omitted.)
Before Leber I was reviewed on appeal, the Lebers settled
their case with all three of the original defendants -- Deputy
Smith, the Sheriff of Erie County and the board. Pursuant to
the agreement, the board agreed to pay the Lebers $2 million
over a five-year period. The board, Deputy Smith and the
Sheriff assigned all of their rights against their insurance
carriers and attorneys to the Lebers. The agreement required
the Lebers to repay the board in the event they recovered money
from the insurance carriers. All appeals of Leber I were then
dismissed.
Following this settlement, the Lebers filed a complaint
against American Home and the law firm of Eastman & Smith.
The Lebers also intervened in the board's declaratory judgment
action against Buckeye Union and were joined as
party-plaintiffs. A motion to consolidate all three of these
actions was granted on January 23, 1987. The Lebers became the
principal plaintiffs in the consolidated action, and the
defendants were Buckeye Union, American Home, Eastman & Smith
and Raymond Watts.
With the claims of the board having been assigned to the
Lebers in the settlement agreement, the Lebers now claimed that
Buckeye Union had in bad faith failed to settle Leber I on
behalf of its insured, the board, within the policy limits.
Similar claims were made against American Home. The Lebers
alleged that Eastman & Smith had committed legal malpractice,
causing damage to the board. The Lebers also claimed that
Raymond Watts breached the fiduciary duty owed to his client,
the board.
Leber II proceeded to trial. During the trial, the Lebers
agreed to dismiss their actions against American Home for $2
million.
On August 10, 1987, Judge McMonagle filed a judgment entry
deciding the declaratory judgment action. The trial court
found that "[f]or purposes of the insurance policy issued by
the Buckeye Union Insurance Company …, the terms Board of
Erie County Commissioners and Erie County are synonymous.
Steven A. Smith is an employee of Erie County and the Board of
Erie County Commissioners. Both Steven A. Smith and the Erie
County Sheriff are insureds under the policy of insurance
issued by the Buckeye Union Insurance Company." The trial
court then declared that $2 million in coverage was available
to the board.
The jury then returned a verdict in favor of the Lebers on
their bad faith claim against Buckeye Union but also returned a
verdict in favor of Watts and Eastman & Smith. The jury
unanimously found that Buckeye Union's conduct "imported a
dishonest purpose, moral obliquity, conscious wrongdoing,
breach of a known duty through some ulterior motive or ill will
partaking of the nature of fraud or embracing actual intent to
mislead or deceive another." Six of the eight jurors found
that Buckeye Union's "conduct in failing to settle the
[Lebers'] claims was motivated by actual malice." As a result
of the verdict, the trial court entered a judgment for
$13,336,232.80 in favor of the Lebers and against Buckeye
Union. The amount of this judgment was calculated by adding the
$10,150,000 judgment from Leber I to $3,064,465.74 in interest
accumulating from the date that Leber I was decided and
$2,121,767.06 in prejudgment interest accruing from July 5,
1982, to August 7, 1984. The trial court then subtracted from
the judgment the $2 million settlement paid to the Lebers by
American Home.
The Court of Appeals for Erie County reversed the judgment
of the the trial court. The appellate court found that Deputy
Smith and the Erie County Sheriff's Department were not
insureds under the Buckeye Union policy. The appellate court
then upheld the trial court's judgment in favor of Watts and
Eastman & Smith and against the Lebers.
The Supreme Court of Ohio remanded the cause to the Court
of Appeals for Erie County to determine the merits of five
assignments of error that the appellate court had determined to
be moot and, thus, declined to decide. See 46 Ohio St.3d 702,
545 N.E.2d 1277.
Upon remand, the court of appeals again reversed the trial
court's judgment in favor of the Lebers and against Buckeye
Union.
This cause is now before this court pursuant to the
allowance of a motion to certify the record.
Murray & Murray Co., L.P.A., Dennis E. Murray, Kirk J.
Delli Bovi and W. Patrick Murray, for appellants.
Fritz Byers, for appellee, Buckeye Union Insurance Company.
Kitchen, Deery & Barnhouse, Charles W. Kitchen and Eugene
B. Meador, for appellee, Raymond N. Watts.
Peck, Shaffer & Williams and Thomas A. Luebbers, urging
reversal for amicus curiae, County Commissioners' Assocation of
Ohio.
Pfeifer, J. For the reasons that follow, we reverse
the judgment of the court of appeals in part, affirm it in
part, and reinstate all of the judgments rendered by the trial
court.
I
The Claims against Buckeye Union
A
The appellate court reversed the trial court's judgment,
in part, because it held that the trial judge improperly
instructed the jury that the $10,150,000 judgment in Leber I
and the Leber I trial court's finding of respondeat superior
between the board and employees of the Sheriff's Department
were binding on the parties in Leber II. The Lebers contest
this reversal.
The law regarding contesting improper jury instructions on
appeal is clearly articulated in Civ. R. 51(A), which provides:
"[A] party may not assign as error the giving or the
failure to give any instruction unless the party objects before
the jury retires to consider its verdict, stating specifically
the matter objected to and the grounds of the objection. …"
In the present case, Buckeye Union did not object to the
trial judge's informing the jury that the judgment against the
board in Leber I was binding on the jury in Leber II. Instead,
Buckeye Union objected to another portion of the same jury
instruction that informed the jury of the trial court's
findings in the declaratory judgment action. Because Buckeye
Union's reason for objecting to the jury instruction is not the
same as its reason for objecting at trial, Buckeye Union was
precluded from arguing on appeal that this instruction was
improper. See Schade v. Carnegie Body Co. (1982), 70 Ohio
St.2d 207,
24 O.O.3d 316,
436 N.E.2d 1001, paragraph one of the
syllabus. Thus, the appellate court's reversal on this ground
was improper.
B
The court of appeals determined that the Buckeye Union
insurance policy did not cover Deputy Smith's negligence nor
did it cover the negligent training of Smith conducted by the
Sheriff's Department. The appellate court strictly interpreted
the insurance contract and found that only the board was
covered by the policy. We disagree.
Endorsement No. CBP 677G of the Buckeye Union policy
stated in relevant part:
"It is agreed that the 'Persons Insured' provision of Part
VI [the general liability section] is amended to include any
employee of the named insured while acting within the scope of
his duties as such …."
The policy expressly based its rates on four hundred
twenty-one employees of the board. Testimony at trial revealed
that employees of the Sheriff's Department were included in
these four hundred twenty-one employees insured by the policy.
The trial court correctly concluded that the Buckeye Union
policy provided coverage for the negligent conduct of Deputy
Smith and the negligent training of Smith conducted by members
of the Sheriff's Department.
Thus, the court of appeals' reversal on these grounds was
improper.
C
On remand, the court of appeals determined that Buckeye
Union was entitled to have the jury interpret the insurance
contract. We disagree.
The interpretation of an insurance contract involves a
question of law to be decided by a judge. In Erie Ins. Group
v. Fisher (1984), 15 Ohio St. 3d 380, 15 OBR 497,
474 N.E.2d
320, a unanimous court held:
"A declaratory judgment action filed by an insurer against
an insured, the purpose of which is to construe an insurance
policy and determine the insurer's obligations to the insured,
and is not for the purpose of determining liability in an
action for the recovery of money, is properly triable to the
court." Id. at syllabus.
In the present case, the trial judge interpreted the
insurance contract but allowed the jury to determine factual
issues such as the presence of malice and fraud or deceit. The
judge perfectly divided the responsibilities between himself
and the jury.
Thus, the court of appeals' reversal on these grounds was
improper.
II
The Claims against Watts
The Lebers claim that they are entitled to reversal of the
judgment in favor of Watts because the trial court failed to
instruct the jury that the burden of proof was on Watts to
prove that he did not breach the fiduciary duty owed to the
board.
We disagree. The Lebers failed to object to Judge
McMonagle's instructions to the jury regarding the appropriate
burden of proof. Thus, pursuant to Civ. R. 51(A), they are
precluded from objecting to the instructions at the appellate
level.
Accordingly, we affirm the decision of the court of
appeals to the extent it upheld the judgment of the trial court
in favor of Watts and against the Lebers.
III
Because the court of appeals erred in the ways discussed
in this opinion, we reverse the judgment of the court of
appeals, in part, and reinstate all of the trial court's
judgments. The findings of the jury should not be disturbed.
Judgment affirmed in part
and reversed in part.
A.W. Sweeney, Douglas, Spellacy and F.E. Sweeney, JJ.,
concur.
Moyer, C.J., and Wright, J., dissent in part.
Leo M. Spellacy, J., of the Eighth Appellate District,
sitting for Resnick, J.
Douglas, J., concurring. I concur with the majority's
analysis of this case but am puzzled by the contentions of the
dissent.
The dissent takes issue with the majority's conclusion
that the Buckeye Union insurance policy provided coverage for
the negligence of Deputy Smith. To support its objections to
the majority opinion, the dissent contradicts itself. It
criticizes the majority for examining evidence extrinsic to the
Buckeye Union policy to determine who the four hundred
twenty-one employees are that the policy insures, yet the
dissent, in an attempt to devine the intent of the parties to
the insurance policy, travels far outside the four corners of
the policy and examines and compares extrinsic matters arising
out of a completely different policy issued by American Home.
The dissent compares the American Home policy's premiums and
coverages to those in the Buckeye Union policy.
Worse yet, when the dissent examines this extrinsic
evidence, it draws an improbable conclusion. The dissent
concludes that because the Sheriff's Department purchased its
own $300,000 liability policy with American Home for a price
significantly greater than the premium the board paid for its
$1,000,000 liability policy with Buckeye Union, the board never
intended its policy to insure the negligent acts of deputy
sheriffs. Insurance coverage must be governed by the terms of
the policy and not by the policy's actuarial soundness.
Worst of all, the dissent's examination of extrinsic
evidence is conveniently -- if not deceivingly -- selective.
When a thorough examination of the record is conducted, it is
unquestionable that the Buckeye Union policy provided coverage
for the negligence of Deputy Smith. The board published bid
specifications describing the policy that it required. The
Buckeye Union policy was issued to comply with those
specifications. In item No. 6 of the section "Underwriting
Instructions" of the 1978 Insurance Specifications (General
Liability), the specifications required insurance to cover "all
sums which the Board of County Commissioners of Erie County,
Ohio shall become obligated to pay as damages by reason of
liability imposed by law." The limit of liability for bodily
injury was to be $1,000,000. The specifications go on to say
that "[t]he name of the insured shall be: Board of County
Commissioners of Erie County, Ohi, [sic] and Erie County
officers and employees. It is understood and agreed that the
inclusion of officer and employees as named insureds [is] ONLY
AS RESPECT TO THEIR DUTIES." (Emphasis added.)
Whether Deputy Smith was an employee of the County
Commissioners or the Sheriff (or both) makes little
difference. He was to be covered by the policy according to
the insurance specifications. The use of the words "Erie
County officers and employees" cannot just be ignored. The
reason is that the Sheriff is an Erie County "officer."
As far back as the year 1892, this court said in State ex
rel. Attorney General v. Brennan (1892), 49 Ohio St. 33, 38-39,
29 N.E. 593, 594, that:
"It is not important to define with exactness all the
characteristics of a public office, but it is safely within
bounds to say that where, by virtue of law, a person is
clothed, not as an incidental or transient authority, but for
such time as denotes duration and continuance, with independent
power to control the property of the public, or with public
functions to be exercised in the supposed interest of the
people, the service to be compensated by a stated yearly
salary, and the occupant having a designation or title, the
position so created is a public office. And where such duties
are wholly performed within the limits of a county, and for the
people of that county, the salary to be paid by the disbursing
officer of the county, from the funds of the county, the office
is a county office, and, as one who is lawfully invested with
an office is an officer, the person lawfully filling such place
is necessarily a county officer.
"From these definitions and illustrations it is clear that
the position created by the act in question is an office, and
that the defendant, if selected in the manner prescribed by
law, is an officer." (Emphasis added.)
Further, "officer" is defined as a "[p]erson holding
office of trust, command or authority in corporation,
government … or other institution or organization."
(Emphasis added.) Black's Law Dictionary (6 Ed.1990) 1083.
"Official" is defined as "An officer; a person invested with
the authority of an office. See also Officer." (Emphasis
added.) Id. at 1084. Black's defines "County officers" as
"[t]hose whose general authority and jurisdiction are confined
within the limits of the county in which they are appointed,
who are appointed in and for a particular county, and whose
duties apply only to that county, and through whom the county
performs its usual political functions." Id. at 351.
"Appointment" is defined as "[t]he designation of a person, by
the person or persons having authority therefor, to discharge
the duties of some office or trust." Id. at 99.
R.C. 325.02 provides that "[t]he salaries and compensation
of county officers provided for by sections 325.03 to 325.09 of
the Revised Code, shall be in lieu of all fees, costs … and
all other perquisites, of whatever kind …." (Emphasis
added.) One of the "county officers" provided for is the
county sheriff. R.C. 325.06. See, also, R.C. 305.02, 305.03
and 305.19.
Any way one cuts it, the policy issued in response to the
1978 insurance specifications includes coverage for Deputy
Smith. The characterizations of the dissent are not well taken.
A.W. Sweeney and F.E. Sweeney, JJ., concur in the
foregoing concurring opinion.
Wright, J., dissenting in part. I respectfully
dissent. I find the majority's brief and inaccurate treatment
of the key issue in this complex case most disquieting. The
facts surrounding this case make it crystal clear that the
general liability section of the insurance policy issued by
Buckeye Union to the Erie County Board of Commissioners ("the
board") did not cover the Erie County Sheriff's Department or
any of its deputy sheriffs. Thus, I would affirm the judgment
of the court of appeals on the coverage issue.
The majority completely ignores the threshold question of
the identity of the named insured. Without a proper analysis
of this issue, the majority's subsequent conclusions not only
are confusing, but fatally flawed.
In 1987, the trial court ruled that the liability policy
covered all Erie County public employees, including the
Sheriff's Department, even though the policy clearly named only
the Erie County Board of Commissioners as the insured. The
court of appeals reversed the trial court's judgment and
correctly ruled that the policy covered, as stated, the Erie
County Board of Commissioners and its (the board's) employees.
In reversing the court of appeals' judgment on the issue
of coverage, the majority purports to "reinstate all of the
trial court's judgments." But the majority does not find, as
the trial court did, that the policy covered all Erie County
employees. Rather, the majority apparently concludes that the
Erie County Sheriff's Department should somehow be considered
employees of the board for purposes of the general liability
coverage under the policy. Thus, the majority appears to agree
with the court of appeals that the policy was limited to
covering the board and its employees.
If the foregoing conclusion is true, the question asks
itself -- i.e., were employees of the Erie County Sheriff's
Department also employees of the board? Because the majority
did not specifically ask that question, it apparently did not
feel compelled to fully answer it, thus oversimplifying its
analysis in reaching the conclusion that the Buckeye Union
policy provided general liability coverage for the Sheriff's
Department. Instead, the majority makes an inexcusable stretch
and extends general liability coverage intended exclusively for
the board and its employees to the members of the Sheriff's
Department, based loosely on a rating factor used in another,
unrelated, part of the policy. The following analysis
conclusively shows that the Buckeye Union insurance policy
covered only the board and its employees, and that the members
of the Erie County Sheriff's Department were neither employees
of the board nor insureds under the general liability section
of the Buckeye Union insurance policy.
Ohio law instructs that "[i]f a contract is clear and
unambiguous, then its interpretation is a matter of law and
there is no issue of fact to be determined." Inland Refuse
Transfer Co. v. Browning-Ferris Industries of Ohio, Inc.
(1984), 15 Ohio St.3d 321, 322, 15 OBR 448, 449,
474 N.E.2d
271, 272. Furthermore, this court consistently has held that
courts have "an obligation to give plain language its ordinary
meaning and to refrain from rewriting the contractual agreement
of the parties." Miller v. Marrocco (1986),
28 Ohio St.3d 438,
439, 28 OBR 489, 491,
504 N.E.2d 67, 69. In other words,
"[w]hen the language of an insurance policy has a plain and
ordinary meaning, it is unnecessary and impermissible for this
court to resort to construction of that language." Karabin v.
State Auto. Mut. Ins. Co. (1984),
10 Ohio St.3d 163, 166-167,
10 OBR 497, 499,
462 N.E.2d 403, 406.
Given the plain language of the insurance policy at issue
here, there is no need to resort to extrinsic evidence (as the
majority does) to determine the scope of the policy's
coverage. Moreover, even in its improper attempt to determine
the scope of the policy's coverage by resorting to extrinsic
evidence, the majority inaccurately construes the extrinsic
evidence in this case.
Buckeye Union's policy clearly and plainly listed only the
board as the "named insured." Under the heading "Insured's
Name and Mailing Address," the policy identified the insured as
the "Commissioners of Erie County Sandusky, Ohio." Part V of
the policy, the Business Auto Liability Insurance portion,
listed the "Named Insured's Business" as the "Board of County
Commissioners." Part VI of the policy, the Comprehensive
General Liability Insurance portion, also listed the named
insured as the "Board of County Commissioners."
There also is no question that, in addition to covering
the board itself, the policy also covered the employees of the
board. As noted by the majority, endorsement No. CBP 677G
modified the policy's coverage under Part VI to include "any
employee of the named insured while acting within the scope of
his duties as such …." The question, therefore, insofar as
coverage is concerned, is whether Deputy Smith was an employee
of the Board of County Commissioners. The answer to this
question, of course, is in the negative.
The policy issued by Buckeye Union did not define the term
"employee." Decisions of this court, however, hold that an
employee-employer relationship exists "only when one party
exercises the right of control over the actions of another and
those actions are directed toward the attainment of an
objective which the former seeks. For the relationship to
exist, it is unnecessary that such right of control be
exercised; it is sufficient that the right merely exists."
(Citations omitted.) Baird v. Sickler (1982), 69 Ohio St.2d
652, 654,
23 O.O.3d 532, 533,
433 N.E.2d 593, 595.
The record contains NO evidence that the board had the
right to control the Sheriff's Department or any of its
deputies. In fact, the majority does not even mention this
issue. Common sense militates against control of the sheriff's
deputies by the board. Moreover, Ohio law does not confer upon
the board such a right of control. R.C. 305.01 provides that
"[t]he board of county commissioners shall consist of three
persons," all of whom are elected officials. Under R.C.
311.01(A), each county also elects a sheriff, and R.C. 311.04
authorizes the sheriff alone (not the board of commissioners)
to appoint deputies. Because only the sheriff has the power to
appoint deputies, only the sheriff has the right to control
their actions. Therefore, Deputy Smith was an employee of the
Erie County Sheriff's Department and not of the board.
Nevertheless, regardless of the foregoing analysis, which
the majority fails to undertake, the majority finds that the
general liability section of the Buckeye Union policy covered
the Sheriff's Department. Unfortunately, in its hasty attempt
to determine whether "any employee of the named insured"
includes employees of the Sheriff's Department, the majority
misconstrues the evidence in this case. The majority concludes
that Smith and the Sheriff's Department are employees of the
board by relying on only two facts: (1) "[t]he policy expressly
based its rates on four hundred twenty-one employees of the
board," which allegedly includes the employees of the Sheriff's
Department, and (2) "Buckeye Union analysts believed that
Buckeye Union was liable under the terms of its policy."
However, these statements are simply not accurate.1 A close
review of the entire record reveals that employees of the
Sheriff's Department clearly were not covered under the section
of the Buckeye Union policy at issue in this case.
A brief explanation of the board's insurance policies,
which the majority opinion ignores, is necessary to fully
understand the scope of the general liability coverage under
the Buckeye Union policy. When the Leber incident occurred, an
American Home Assurance Company policy covered personal injury
liability incurred by the Sheriff's Department. The insurance
policy between the Board of Commissioners and Buckeye Union was
a comprehensive business policy, containing six mutually
exclusive coverages. Two of these mutually exclusive coverages
were Part V, Comprehensive Automobile Liability coverage, and
Part VI, Comprehensive General Liability ("CGL") coverage,
which covered bodily injury and property damage. The two
policies were not duplicative. The Buckeye Union policy was
the only policy that covered county automobile liability. The
American Home policy was the only policy that covered personal
injury liability incurred by the Sheriff's Department.
The CGL coverage under Part VI of the Buckeye Union policy
is the only coverage that is at issue in this case. The
definition of "Persons Insured" relied upon by the majority
opinion is found in Part VI of the policy.
The majority opinion states, "The policy expressly based
its rates on four hundred twenty-one employees of the board."
This statement is misleading at best. Buckeye Union based its
premiums on four hundred twenty-one employees only for purposes
of automobile coverage, which appears in Part V, not Part VI of
the policy. Buckeye Union needed to base its premiums for the
automobile coverage on four hundred twenty-one employees
because the Buckeye Union policy was the only policy that
covered governmental automobile liability, and Part V extended
automobile liability coverage to "any auto" used by a county
employee.
Unlike Part V (the automobile coverage under the Buckeye
Union policy), Part VI (the general liability coverage that is
the sole issue in this case), clearly did not cover four
hundred twenty-one employees. Instead, the facts reveal that
Part VI covered only the direct employees of the Board of
Commissioners, which did not include employees of the Sheriff's
Department. The American Home policy already covered personal
injuries for which the Sheriff's Department would be liable.
Another policy covering such injuries would have been
duplicative.
Even more convincing, the premiums that the board paid for
bodily injury coverage under the general liability section of
the Buckeye Union policy were far too low to cover four hundred
twenty-one people. The record reveals that the board paid
annual premiums of only $2,929 for bodily injury coverage under
the general liability section, which included no deductible.
There is no doubt that the premium for bodily injury coverage
of four hundred twenty-one people would have been much higher.
The premium that the board paid for bodily injury coverage
was especially low when compared to the annual premium that the
Sheriff's Department paid under the American Home policy for
personal injury coverage of only sixty-two employees. The
Sheriff's Department had to pay annual premiums of over
$10,000, with a $1,000 deductible, for only sixty-two
employees. Moreover, the American Home policy had much lower
coverage limits than the Buckeye Union policy. The American
Home policy had limits of $100,000 for each person and $300,000
for each incident. The bodily injury portion of the Buckeye
Union policy covered up to $1,000,000 for each occurrence.
Therefore, if the majority opinion is correct, the board,
compared with the premiums the Sheriff's Department paid under
the American Home policy, would have paid Buckeye Union less
than one-third in premiums to get ten times the coverage, with
no deductible, for nearly seven times as many employees. Such
terms are just too good to be true. Clearly, the general
liability section of the Buckeye Union policy covered fewer
than four hundred twenty-one people.
The majority opinion also states that "Buckeye Union
analysts believed that Buckeye Union was liable under the terms
of its policy." This statement is also inaccurate. Only a
single local adjuster, who apparently had no legal background
and no authority to make coverage decisions, thought that
Buckeye Union was liable under the policy. Responsible Buckeye
Union officials, who had authority to make coverage decisions,
concluded that the policy did not cover the Sheriff or any of
the sheriff's deputies.
It is very clear to me that the insurance policy issued by
Buckeye Union provided no general liability coverage for the
actions of the Erie County Sheriff's Department or any of its
deputies. In light of the foregoing analysis, I think it
borders on outrageous that a "bad faith" claim could survive a
directed verdict. We have deprived Buckeye Union of due
process of law in this matter.
For the foregoing reasons, I would affirm the decision of
the court of appeals regarding the coverage issue.
Moyer, C.J., concurs in the foregoing opinion.
FOOTNOTE:
1 A concurrence argues that the Buckeye Union policy
provides coverage for Deputy Smith (and the whole Sheriff's
Department for that matter), because the board's bid
specifications stated that the named insured would be the board
and Erie County officers and employees. However, the
concurrence overlooks the fact that the policy itself omits the
words "Erie County" as a modifier to the word "employee." As
previously noted, the Board of County Commissioners is the only
"named insured" under the plain language of the policy, and the
policy merely covers "any employee of the named insured." If
anything, the deletion of the words "Erie County" between the
time of the bid specifications and the final terms of the
policy suggests that the policy provides coverage only for
direct employees of the board, not all employees of the entire
county of Erie.
